Upper Trishuli 3A Upgradation: Energy Ministry now seeks more money

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    KATHMANDU, JUN 05 –

    Trishuli_A_Bridge After the controversial decision to upgrade Upper Trishuli 3A, the Ministry of Energy (MoE) has requested the Finance Ministry to manage additional funds for the hydropower project.

    Through a minister-level decision, the MoE on Monday sent a formal letter to the Ministry of Finance (MoF), asking the latter to plead with the China EXIM Bank to provide a soft loan worth US$43 million.

    “We have requested the Finance Ministry to request China Exim Bank for additional resources required for the project’s capacity expansion,” Energy Secretary Hari Ram Koirala said.

    Despite criticism from all quarters, the Nepal Electricity Authority (NEA) board on Friday decided to upgrade the project’s capacity from the earlier 60 MW to 90 MW. This is the first time the government has increased the capacity of a hydropower project midway. The move will now take up the total cost by Rs 4 billion and delay the construction by three more years.

    Interestingly, the MoE’s request to upgrade the project’s capacity was turned down by the Finance Ministry last year. In mid-June 2012, the MoE had sought the MoF’s approval for the

    upgradation along with support in convincing the EXIM Bank to provide more loans.

    According to Koirala, China EXIM Bank has shown interest in investing more money in the project’s construction. “During several informal talks, the bank has assured us it will provide additional cash in soft loan,” he said, adding, “As per its assurance, we have formally initiated the process to take more loans.”

    According to MoF sources, ministries must take prior approval from the Finance Ministry on decisions that are prone to create more liability to the government or those that need more funds from foreign agencies. However, the MoE did not follow this rule while deciding to upgrade the Upper Trishuli 3A.

    “The objectives, procedures and intentions of the NEA board’s decision are already flawed.

    It has also ignored the authority of the MoF, the approval of which was crucial,” a high-level official at the MoF said.

    Finance Secretary Santa Raj Subedi was absent when the NEA board decided to upgrade

    the project’s capacity. The secretary, also a board member, refused to sign the minutes earlier, saying the project cannot be upgraded as it is being developed under the EPC (engineering, procurement and construction) contract. The NEA decision is also against the Public Procurement Act which says project cost cannot be increased by more than 10 percent. The construction of the project (then 60 MW) had been initiated with loan from China Exim Bank. On February 25, 2011, the Cabinet approved a Rs 7.08 billion loan for its construction.

    With the capacity now up to 90 MW, the project cost has increased by $42.8 million. When bids were called for, the China Gezhouba Group Co quoted $89.18 million for 60 MW and $111 million for 90 MW. The government had awarded the 60 MW project at $89 million. The nod for upgradation means the contractor got the 90 MW project for $132 million.

    Source : The Kantipur Post